Correlation Between China Oilfield and ASPEN TECHINC

Can any of the company-specific risk be diversified away by investing in both China Oilfield and ASPEN TECHINC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China Oilfield and ASPEN TECHINC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Oilfield Services and ASPEN TECHINC DL, you can compare the effects of market volatilities on China Oilfield and ASPEN TECHINC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Oilfield with a short position of ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Oilfield and ASPEN TECHINC.

Diversification Opportunities for China Oilfield and ASPEN TECHINC

-0.76

Correlation Coefficient

China Oilfield  ASPEN TECHINC

Pay attention - limited upside

The 3 months correlation between China and ASPEN is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding China Oilfield Services and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL and China Oilfield is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Oilfield Services are associated (or correlated) with ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of China Oilfield i.e., China Oilfield and ASPEN TECHINC go up and down completely randomly.

Pair Corralation between China Oilfield and ASPEN TECHINC

Assuming the 90 days horizon China Oilfield is expected to generate 3.15 times less return on investment than ASPEN TECHINC. In addition to that, China Oilfield is 1.44 times more volatile than ASPEN TECHINC DL. It trades about 0.03 of its total potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.13 per unit of volatility. If you would invest  21,400  in ASPEN TECHINC DL on October 8, 2024 and sell it today you would earn a total of  2,400  from holding ASPEN TECHINC DL or generate 11.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

China Oilfield Services  vs.  ASPEN TECHINC DL

China Oilfield Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Oilfield Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, China Oilfield is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ASPEN TECHINC DL

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASPEN TECHINC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with China Oilfield and ASPEN TECHINC

The main advantage of trading using opposite China Oilfield and ASPEN TECHINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Oilfield position performs unexpectedly, ASPEN TECHINC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ASPEN TECHINC will offset losses from the drop in ASPEN TECHINC's long position.

The idea behind China Oilfield Services and ASPEN TECHINC DL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.